You can follow the billboard signs to new home areas, get directions off newspaper display advertising or dig up new home neighborhoods on the Internet. But what should you really be considering when deciding on where you’ll hand over your hard-earned dollars on an investment this large?
No matter how you slice it, “location, location, location” comes before choosing a builder.
Residential developers do a LOT of homework before they buy tracts of land upon which to develop master-planned and other types of neighborhoods.
They get geological reports to see if the area is an environmentally good investment.
They check with the local city and county planners’ offices to see what the future of a particular area may offer in terms of utilities, roads and access to commercial businesses.
Then they look at population growth trends – demographics that tell them the types of buyers, which age groups and what income levels they can target.
They also look at local industry and see where the most likely job bases are so that they may be able to draw potential buyers from them.
After all of that – plus a lot more research – homebuilders begin to design what we call “product.” If they take seriously all the demography they just paid for, the floor plans they come up with will reflect that what consumers within that demography look for in both lifestyle and housing designs.
Even if all that research doesn’t hit its mark, builders somehow count on finding a driver for every seat – or eventually a buyer for every house. How much and how quickly the home you choose appreciates in value can depend quite a bit on the location. But whether the location is stellar or mediocre, you must imagine yourself waking up there every morning. According to Craig Jensen, a vice president of sales and marketing for homebuilding giant Ryland Homes, it’s a good idea to drive through more than one neighborhood a given homebuilder has built, especially if you are a first-time homebuyer. Neighborhoods occupied by owners that care about equity and appraisal values will naturally show pride of ownership by the way they keep their homes’ exterior and landscaping.
Let’s go over some of the criteria you should keep in mind when researching and considering new home areas. First is budget. It doesn’t really matter how much of a magnet the homes are in a certain area if they’re out of your price range, which should be pre-determined by your mortgage professional. For starters, go to LendingTree.com’s mortgage tab and try their mortgage calculator.
Let’s look at how builders set prices, though. Have you wondered why some new home areas have price tags higher than others just a few miles away for similar sized homes? How can a builder get $30,000 more for the same home he builds in another suburb of town??-- you may ask. The reasons can vary and can include:
the proximity to employment centers
other homes of higher value and prestige that have been already established
the fact that land costs were higher to begin with
the surrounding real estate market indicates a good probability that homes will sell for higher prices in that location
If you are considering stretching your budget to get into an area that hits your prestige button, it may be comforting to consider that the smallest, least expensive homes in larger home areas generally have a higher appreciation curve than the bigger floor plans. Here’s where you may accept less house for the money and compromise those wish list items you said were so important to you when you started your search. There is, of course, a trade-off for everything.
Consider lifestyle as well as price point. Whatever neighborhood or home you consider purchasing, we encourage you to go into it with your eyes wide open in terms of what your daily life will look like.
Perhaps a condo or townhome is the ticket for you. Townhomes, co-ops and condos offer affordability and convenience you might not find in a single-family home, but thinking about purchasing one takes a radically different approach.
These types of properties generally run about $30,000 to $50,000 less in median price than a single-family home nationwide. Buying more affordable housing such as this may be like buying a share in real estate holding company that is governed by an ever-changing regulatory system dependent on volunteers – in other words, your neighbors.
The word condominium is Latin for “common ownership.” Built in higher densities than traditional, single family neighborhoods, some are considered CIDs – (common interest developments) – which means that you own all the air space and everything between your walls – and you are a shareholder in the remainder of the buildings, grounds and other common areas. Then there are PUDs (planned unit developments) which are more commonly town homes or zero-lot-line to small-lot homes that permit you a little yard beneath your unit, oftentimes with no units stacked over yours.
Virtually all these kinds of communities have one thing in common – each resident or owner acts as a shareholder in all or a portion of the development, and each pays dues to the homeowners’ association (HOA) which is responsible for the care and maintenance of the buildings and grounds. Running a development like this is dependent on dozens of rules, regulations and guidelines laid out early in the planning stages of the neighborhood. The builder generally runs the HOA until a certain occupancy level is achieved, and then the torch is passed on to the homeowners themselves.
This type of home purchase can have its attractors as well as its detractors, depending on what your idea of home turns out to be. If you are a busy executive who wants to turn a key and fly to business meetings or an empty-nester who now has the time and money to travel, the no-brainer aspect of a condo can be attractive.
Another advantage is some “givens” inherent in this kind of purchase – you can be sure that no one will be raising pet ducks in the next yard, that no one will be painting their unit chartreuse, and that you can now get rid of that ancient lawnmower that has served you so well. You may also have a heightened feeling of security, with gates, walls, security systems and limited access to outsiders. This factor is one of the reasons why a growing number of unattached women (single, divorced or widowed) have come to favor denser housing arrangements, according to recent studies. The National Association of Realtors reports that 47% of all condos are now being purchased by women, making them one of the fastest growing segments of home buyers.
If, however, you have dreams of parking your RV near your unit, keeping your two pit bulls in the house or yard and imagining room for a pool that doesn’t take up your entire back yard (assuming you have some kind of yard space) – it’s probably not going to meet your expectations in terms of lifestyle. Even with better insulation in new attached housing communities, you may still be able to overhear your neighbors, breath in their cooking smells and share common facilities like greenbelts, pools and clubhouses – whether or not you’d like to run into your fellow owners or renters.
The best homeowners’ associations have more than 70% owner occupancy. To protect your interests, you may want to have a real estate attorney perform a “once-over” of the mountain of the homeowner association’s governing documents so that you know precisely what you’re getting into.
The next location parameter to consider is the potential for economic growth in an area.
Some areas grow quickly and others maintain a steady pattern. Still others may be on the downhill slope. The more depressed areas are no doubt where some of the best bargains may be, but buying new construction in a depressed area may truly be a gamble for you in terms of investment stability for a while. The risk-takers among us, however, have sometimes done well when hanging on to property in areas like this when they are betting on the planned re-gentrification of an older neighborhood.
In contrast, fast growth areas can experience growing pains. Community services and schools may not keep pace at first with the surrounding growth, giving you that “hurry-up-and-wait” syndrome to deal with. Builder salespeople will tout future growth and fast appreciation possibilities, possibly even holding lotteries to permit potential buyers to choose home sites. And you may be ecstatic over getting a beautiful lot on which you can place a potentially gorgeous home. Keep in mind that in this case, patience will become a virtue --while the surrounding commercial and recreational areas get built around you.
Stable communities may tend to have slower home value appreciation, but are more likely to have infrastructure, schools and public services already in place or in the process of being improved or expanded for the growing resident population.
Extremely slow-growth areas or those at a standstill are areas where consumers may be wise to not pour a lot of money into upgrading or improving their original investments, since refinancing or re-sale issues may surface when appraisers try to justify every dollar and cent spent on the property.
The quality of the public schools in any area is important for appreciation even if you don’t have children at home or anticipate having your children attend them. As with other factors that affect value, your re-sale value can be affected by the reputation of the school system near where you buy. You can research this by visiting the local schools or by going to The National Center for Education Statistics on the Internet to gather data.
Home shoppers tend to visit new home areas on weekends, when traffic patterns differ from what would end up being their normal commute to those areas. If you’re considering new home subdivisions in remote areas, it’s wise to sample the commute when you would be most apt to experience it. Take the location of gas stations, grocery stores and other types of places you frequent into consideration as well. Those idyllic island-in-the-hills communities can lose some of their majesty when you find yourself driving ten miles for food.
By the same token, if you are looking at purchasing urban in-fill or rehabbed up-and-coming areas found within our cities these days, check out the times of day noise levels and traffic may be at their highest, so that you won’t feel that you must dodge trucks and burnt-out commuters when pulling into your city-chic garage. Most urban residential builders offer parking or garage access off alley-ways or on less-trafficked sides of their development. Multiple-vehicle family groups would want to examine where they would house or park vehicles or consider freeing themselves of cars and the expense of them altogether.
This trend for urban infill and redevelopment by homebuilders is borne of the lack of land or affordable dirt in outlying areas as well as the desire for certain growing demographic groups to return to city centers where entertainment, convenience and lack of a commute becomes more attractive. Cities themselves can kick in a lot of extra dollars through their redevelopment plans to make the pot sweeter for residential builders to sit up and take notice as well. Even if you decide on an outlying area, it may come as no surprise that homes within a quarter mile of public transportation, freeways or interstates (whatever they’re called in your part of the country) can command more value near larger urban areas than ones a considerable distance away – keeping residents connected to employment centers and entertainment venues.
The proximity to sports activities, churches or clubs in which you are involved – or even people you see regularly – may become involuntarily sacrificed because of the distance they become from your new home; a change you must think long and hard about. Would you attend what is important to you less often after awhile, even if your intentions were good when you moved in? Would you find yourself dropping out of activities that used to bring you enjoyment just because you decided to live so far out? Or would you feel comfortable and realistic enough to welcome new forms of involvement and entertainment in your new locale if you find that you must let go of some past associations?
Property taxes and assessments are another important consideration. Take a realistic look at the real estate taxes you can expect to pay in an area and then try to uncover any planned special assessment or tax increases. You can find out this information by calling the individual builders that build there, or by calling the County Tax Assessor in that area. Fast-growth new home areas tend to need extra funds for vital community services. Don’t forget to ask your accountant how much of your tax dollars can be written off if you make a decision to buy in an area that requires these special assessments.
Doctors and hospitals and their proximity to you should not be overlooked. If you have any medical conditions that would require specialists, see how far you may have to travel to see them. Check out emergency room facilities and vicinity family practice doctors as well.
Get statistics and locations for local police and fire personnel in the area you’re looking into. The protection they offer and their average response time is something not to be taken lightly. You can Google “emergency response times crime rates” followed by the name of the city or county on the web to check things out. Real estate salespeople and the builder’s salesperson cannot and will not discuss these matters with you, since they incur an unspoken risk of liability should they make representations about safety, schools, or the demographic make-up of any residential area. Megan’s Law made it possible to have free access to locations of registered sex offenders. Try www.Megans-law.net for a listing of state web sites for this purpose.
Good parks and recreational facilities are important -- not only to you as a potential buyer, but for future value as well. Look for youth programs, community events and ample parks in the area. Adequate green space, sidewalks and parks can offer a place of relief to hardworking parents while giving children room to stretch growing limbs. Don’t forget to check out theaters, libraries, and day care centers as well.
Utility hookups and the types of energy available in any new home area should be reviewed. What is the water’s source and what is its quality, even if you opt to drink filtered or bottled water in your household? Are the homes on septic systems? Do they use natural gas or electric heat? And how about that all-important cable TV, high-speed internet availability or telephone service carriers? It’s not unheard of for these services to be readily available in one neighborhood and not available at all just a few miles or even streets away. If monthly expense is a concern, you can have a typical bill survey conducted for you for each utility if you call each company directly.
Look for red flags and when you find them, ask about them.
How busy will that 4-lane street leading to the neighborhood become?
What about the railroad tracks nearby and the noise factor, or flight patterns from nearby airports?
Is there a landfill or sewage treatment plant somewhere in close proximity to the homes?
How close are high voltage power lines? Information on EMFs (electric and magnetic fields) is available through the Internet or through local utility companies.
Environmental hazard reports should be available through the builder for any area you are considering or through the city planner’s office. Out west, there are areas where gold mining turned soil over, leaving huge expanses of rocks to deal with when landscaping or digging for swimming pools and the soil is replete with asbestos. In other areas, former military bases and air fields have left behind some environmental concerns. Find out is there are any soils conditions, environmental hazards or ground water issues that must be or have already been remedied. It’s not uncommon for chemicals used on farmlands or industrial areas to affect the groundwater quality as well.
When looking at the best places to raise a family, you can check with local tourist bureaus, Chambers of Commerce and internet sources. Cost of living factors should be taken seriously, even if you’ve been offered a significant raise to move to a particular area. You’ll need to see just how far that 25% increase in salary will go before packing up your boxes and moving your entire family to the new locale. Try LendingTree.com’s Affordability Calculator to get an idea.
High home ownership rates are indicators that a population has a vested interest in maintaining living standards. There are a multitude of sources from which to glean this information, including local title companies and Chambers of Commerce.
The number of college-educated residents can be a bellwether for how much value is placed on education in a particular community. Chambers of Commerce should have included this information in their reports as well.
Can you put up with month after month of overcast or rain, do you prefer to have constant sunshine and ten or more days of 100-plus degree heat or are you somewhere in between? You can visit weather.com to see average rainfall and temperatures of various cities across the U.S.
Let’s briefly touch on the micro-location of the home you may want to buy. Aside from choosing a geographic area and a neighborhood, if you have a choice in where your new home will be located within the neighborhood, you may want to think about the pros and cons of the various home sites from which you can choose.
Corner lots sometimes carry a premium (an added cost) depending on the builder. Corners have the potential to present a house with a more estate-like appearance, since both the front and side elevations are visible. They may be slightly larger and the side space more generous due to their natural orientation. Some buyers consider corner lots to be more private due to the lack of a neighbor on one side but others feel more vulnerable because of it. If a corner lot is located at the entrance to a subdivision, the builder sometimes adds add extra greenbelt landscaping along with a permanent monument announcing the neighborhood by name. Whatever advantages you perceive, also take into consideration that cars will whip by a corner not knowing what may be around the other side. For that reason, people with small children may want to take special note.
Cul-de-sacs have been popular since the 50s and are a mainstay in many new home communities for their inherent potential to utilize land wisely. These are keyhole-shaped dead-ends, where several houses are fanned out facing the top of the key. This means no through-traffic, of course – which many will pay extra to have, since cul-de-sacs are considered to be among the quietest locations in the neighborhood.
Cul-de-sac backyards can be more generously sized due to the pie-shaped effect this arrangement offers as well. In family neighborhoods, children tend to take advantage of this expanse of asphalt in front of their homes by setting up roll-out basketball goals, skateboard ramps or orange-coned obstacle courses. Great if you’re a kid. Not fun if you have to dodge these items (and their users) when pulling into your garage.
In case it interests you, the top of the key in a cul-de-sac can translate into unfavorable Feng Shui (prononunced Fung-shway) -- (an ancient science of determining energy and good omens based on the orientation of objects)-- since this location would permit the good “chi” (energy) to pass through the keyhole. In the western U.S. some builders purposely offset homes to avoid this perception as well as many other architectural touches that are not Feng Shui-correct.
It’s also important to note how the home is situated on a slope or hillside. It may not ring true that homes built below street level with downhill driveways are less desirable locations. Many builders contour and grade the home site so that the drainage flows appropriately, with no ponding occurring on the property. Try to find out where the water is supposed to flow from a lot you’re considering, since it would be you who may be held liable for flooding a neighbor’s property downhill from yours.
Builders will explain grading to you when asked, but they will also lend plenty of caveats to your altering any of the grading they have put in place when you first purchase the home. Re-grading a backyard area to receive a patio, a pool or retaining wall may void whatever drainage warranty the builder will have extended to you when the house was new, unless it is shown to be inspected and signed off by the city permit building authorities.
Opting for a hilltop location has its considerations as well. Aside from the grading and drainage issues we just mentioned, the view that attracts you to this property may or may not be permanent. You must study the plans the builder has laid out for surrounding homes. A two-story home built directly in front or back of your sprawling single story rancher atop an upslope or atop a hill can quickly dampen the dream you had for a view of the city lights in the distance. A trip to the city planner’s office to check for commercial or retail development within view of your new home may also be in order.
Another home site concern should be easements. These are areas within the lot designated to contain or be retained for the use of utilities or right-of-way. If you buy a home whose lot has an easement running smack through the middle of it, you might be prohibited from adding outbuildings, patios, swimming pools or spas – anything permanent in nature over the easement-restricted area.
Those high tension power lines within view of your house may be a reason for more research. Questions have been raised about the possible health effects of the power frequency of electric and magnetic fields (called EMF) found wherever you have electric power. You can get a brochure from or visit the web site for the local power company to help you understand the EMF issue plus get practical tips to reduce your exposure.
When examining the different home sites available to you, ask to see the house you have in mind plotted on the lot(s) you have in mind. A single-story footprint will take up much more room than a two story with similar square footage. How much back yard space will be left when you measure from the structure to the property line? How about side yards – does at least one side have enough room to park a boat or an RV –if that’s something you may need or even plan for later on? What does each window overlook in the floor plan you’re considering? On-site salespeople may not be as educated in explaining blueprints to you as you’d like, so you may want to ask for their building superintendent to meet with you to explain them.
Location rules when buying a new home, whether it’s for future appreciation or just for your own peace of mind. Gathering vital information that provides you with detailed knowledge about communities you’re thinking of calling “home” can prevent major problems, uncomfortable living situations and unpleasant surprises BEFORE you make a leap of faith and move to new locale. Forewarned is forearmed!!
Dena Kouremetis is a veteran freelance real estate consumer journalist and California real estate broker. She may be reached by email at REritr@aol.com.
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